Incorporating solatube and solar energy into your home doesn’t just help the environment, it makes good financial sense too. Not only will you save on utility costs, until the end of 2019, but you can also receive a tax credit of up to 30% of the costs of your solar installation. But how does this solar tax credit work? Can you get it back on the cost of your installation upfront?
What is the Solar Tax Credit?
While colloquially known as the Solar Tax Credit or the Federal Tax Credit, this incentive is more officially referred to as the Residential Renewable Energy Tax Credit or the Investment Tax Credit (ITC). This tax credit is currently being offered until Dec 31, 2019, with a maximum of 30% of the costs of solar panel materials and installation. After this point, the tax credit percentage available will decrease in steps until it is no longer offered.
How a Tax Credit Works
There can be some confusion as to how the tax credit works, and how solar installers receive their 30% back. Unlike rebates which may take the form of a check sent in the mail or a discount that is applied directly to the cost of a product, a federal tax credit is used to the tax you pay to the Federal government.
With a tax credit, the incentive is applied when you file your Federal income taxes. The value of up to 30% of the qualified expenditures on your solar system is calculated, including both product and installation costs. When you file your Federal taxes that year, this value as credit is applied to the tax you owe. This means that you will either owe less tax, owe no tax, or owe no tax and have a credit left over for subsequent years.
When Will I Get the Solar Tax Credit?
As long as you are eligible, you will qualify for the solar tax credit as soon as your system is installed and paid. However, because this incentive is a tax credit, you won’t receive the financial benefit until you file your Federal taxes for that year.
How to Get The Solar Tax Credit?
The first step to getting the Federal Solar Tax Credit is ensuring that you are eligible. To be eligible, you need to own your solar energy system. You also need to be liable for Federal taxes, as this is a tax credit.
Next, you need to fill in IRS Form 5965 to validate your qualification for renewable energy credits for your solar energy system. Then you can add your renewable energy credits to your 1040 form.
With the Investment Tax Credit at its full rate in place for just a little more than a year from now, now is the time to start thinking about installing your renewable system. Solatube offers some qualifying products, so talk to the experts at Solabrite today, to find the right renewable soliton for your home.